I

ABSTRACT

Author:

Title:

Juho Tuomas Kauhanen

Study on Customer Perceived Value of Container Loading

Equipment

Year: 2015 Place: Pieksämäki

Master’s Thesis

Examiners:

Lappeenranta University of Technology,

Department of Industrial Management.

81 Pages, 21 figures, 13 tables and 2 appendices.

Professor Asta Salmi, Lappeenranta University of Technology

D.Sc (Tech) Joona Keränen, Lappeenranta University of

Technology

Keywords: Organizational Buying Behavior, OBB, Customer Value,

Purchasing Process, Customer Value Propositions

The goal of the thesis was to gain understanding of organizational buying behavior

and its effect from the selling perspective and to generate base for verifying customer

value propositions for Actiw Oy. The first objective was to discover the current

buying decision criteria of current customers to understand the buying motives which

had led to the investment initially. Second objective was to understand how the

buying decision criteria and customer experiences can be turned into customer value

propositions. Research was done with 16 customer interviews, which were focused on

obtaining the information on the buying center and the value of the solution.

Thesis goes through the main theories of OBB and the theory behind customer value

management. Based on customer interviews, the currently used customer value

propositions were tested and categorized into points-of-parities and points-of-

differences. The interviews confirmed customer behavior in new task and modified

rebuy situations and also gave confirmation to the internally done customer value

propositions. Main finding of the study was, that as the value propositions are

possible to present more specifically to each new case instead of using all benefits at

the same time.

II

TIIVISTELMÄ

Tekijä:

Työn nimi:

Juho Tuomas Kauhanen

Tutkielma asiakkaan kokemasta arvosta kontitusjärjestelmän

osalta

Vuosi: 2015 Paikka: Pieksämäki

Diplomityö

Tarkastaja(t):

Lappeenrannan teknillinen yliopisto, tuotantotalous.

81 sivua, 21 kuvaa, 13 taulukkoa ja 2 liitettä.

Professori Asta Salmi, Lappeenrannan teknillinen yliopisto

TkT Joona Keränen, Lappeenrannan teknillinen yliopisto

Hakusanat:

Organisaation ostokäyttäytyminen, OBB, asiakasarvo,

ostoprosessi, asiakasarvoehdotelma

Työn tavoitteena oli selvittää organisaation ostokäyttäytymisen teoriaa sekä sen

vaikutusta myynnin näkökulmasta sekä luoda Actiw Oy:lle pohja jolla todentaa

asiakasarvoehdotelmia. Päätavoitteena oli ymmärtää asiakkaiden ostomotiiveja jotka

olivat johtaneet investointiin. Toisena päätavoitteena oli ymmärtää kuinka ostopäätös

kriteeristö sekä asiakaskokemukset voidaan muuntaa asiakasarvoehdotelmiksi.

Tutkimuksessa tehtiin 16 asiakashaastattelua joiden tarkoituksena oli selvittää

asiakkaan osto-organisaatiota sekä asiakkaan saamia hyötyjä laitteesta.

Tutkielma käy läpi organisaation ostokäyttäytymisen pääteoriat, sekä asiakasarvon

johtamisen teoriaa. Nykyisin käytetyt asiakasarvoehdotelmat testattiin sekä

kategorisoitiin eroavaisuuksiin sekä samankaltaisuuksiin asiakashaastattelujen

pohjalta. Haastattelut vahvistivat yrityksen olettamuksia asiakkaiden

ostokäyttäytymisestä sekä uusissa että modifioiduissa ostotilanteissa, sekä vahvisti

sisäisesti tehtyjen asiakasarvoehdotelmien paikkaansapitävyyttä. Työn päätuloksena

voidaan pitää sitä, että asiakasarvoehdotelmat voidaan nyt kohdistaa paremmin

asiakkaittain. Työn tuloksia voidaan käyttää arvopohjaisen myynnin kehittämisen

pohjana Actiw Oy:n tarpeisiin.

III

TABLE OF CONTENTS

ABSTRACT ........................................................................................................... I 

TIIVISTELMÄ ..................................................................................................... II 

TABLE OF CONTENTS ................................................................................... III 

LIST OF FIGURES .............................................................................................. V 

LIST OF TABLES .............................................................................................. VI 

1  INTRODUCTION ......................................................................................... 1 

1.1  Background of the study ........................................................................... 1 

1.2  Objectives and limitations of the thesis .................................................... 2 

1.3  Structure of the thesis ................................................................................ 3 

2  ORGANIZATIONAL BUYING BEHAVIOR ............................................ 6 

2.1  Robinson, Faris and Wind Model ............................................................. 6 

2.1.1  BUYGRID - Model ............................................................................. 6 

2.1.2  Buyclasses .......................................................................................... 8 

2.2  Webster and Wind Model ....................................................................... 11 

2.3  Sheth Model ............................................................................................ 17 

2.4  Johnston and Lewin Model ..................................................................... 20 

3  CUSTOMER VALUE PROPOSITIONS IN BUSINESS-TO-BUSINESS

CONTEXT ........................................................................................................... 23 

3.1  Value Conceptualization ......................................................................... 24 

3.2  Constructing Customer Value Propositions ............................................ 27 

3.3  Proving Value Propositions .................................................................... 30 

3.4  Value based sales process ....................................................................... 31 

4  CASE: CONTAINER LOADING AUTOMATION ................................ 34 

4.1  Case company presentation ..................................................................... 34 

4.2  Actiw Oy Products .................................................................................. 35 

IV

4.3  Standard cargo spaces ............................................................................. 38 

4.4  Current loading methods and competition in automated loading ........... 39 

4.5  Currently recognized value propositions of LoadPlate ........................... 43 

5  RESEARCH METHODOLOGY ............................................................... 46 

5.1  Case study as a research method ............................................................. 46 

5.2  Data sources and content analysis ........................................................... 49 

6  EMPIRICAL RESULTS ............................................................................. 51 

6.1  Buying behavior in the case product ....................................................... 51 

6.2  Buying decision criteria of the current customer base ............................ 54 

6.3  Identified benefits of LoadPlate .............................................................. 55 

6.3.1  Third party customers ...................................................................... 55 

6.3.2  Producers ......................................................................................... 59 

6.3.3  Points-of-difference and Points-of-parity ........................................ 62 

6.4  Verification of customer value propositions ........................................... 66 

7  CONCLUSIONS .......................................................................................... 69 

7.1  Managerial implications .......................................................................... 70 

7.1.1  Confirmed Value Propositions ........................................................ 73 

7.1.2  Value based sales process ............................................................... 75 

7.2  Limitations to the study .......................................................................... 77 

8  REFERENCES ............................................................................................ 79 

V

LIST OF FIGURES

Figure 1. A model of organizational buying behavior. .......................................... 12 

Figure 2: Relevance of processes by role in buying center. .................................. 16 

Figure 3. An integrative model of industrial buying behavior. ............................. 18 

Figure 4: An integrated model of organizational buying behavior........................ 21 

Figure 5: Customer value management processes ................................................. 23 

Figure 6: Suggested process framework for a value-based sales process ............. 31 

Figure 7. Actiw Oy Turnover and profit margin ................................................... 34 

Figure 8. LoadPlate container loading unit ........................................................... 35 

Figure 9: Cumulative LoadPlate sales 2001-2014 ................................................. 36 

Figure 10: Actiw LoadMatic ................................................................................ 37 

Figure 11: 40ft High cube container ...................................................................... 39 

Figure 12: 40ft Open-top container ....................................................................... 39 

Figure 13: Typical way of loading lumber into sea containers ............................. 41 

Figure 14: Possible damages and lost space in lumber containerization ............... 41 

Figure 15: Containerstuffers C-Loader loading lumber ....................................... 42 

Figure 16: IBS Container-Filler loading project cargo .......................................... 43 

Figure 17: Case study research process. ................................................................ 46 

Figure 18: The value construction process ............................................................ 51 

Figure 19: Process framework for a value-based sales process ............................ 70 

Figure 20: Proposed roadmap for marketing improvement ................................... 72 

Figure 21: Proposed Value Based Sales Process for LoadPlate ............................ 75 

VI

LIST OF TABLES

Table 1: Thesis structure .......................................................................................... 4 

Table 2: The BUYGRID Analytic Framework for Industrial Buying Situations. ... 7 

Table 3: Distinguishing characteristics of Buying Situations. ................................ 7 

Table 4: Building Blocks of a Successful Customer Value Proposition ............... 25 

Table 5: Which Alternative Conveys Value to Customers?. ................................. 27 

Table 6: Actiw Oy product portfolio ..................................................................... 38 

Table 7: Container External and Internal Dimension according to ISO 668 and

ISO 1496-1 ............................................................................................................ 38 

Table 8: Conducted interviews by customer segments.......................................... 48 

Table 9: Conducted interviews .............................................................................. 50 

Table 10: Points-of-Parities and Points-of-Difference for LoadPlate ................... 62 

Table 11: Fill rate comparison ............................................................................... 67 

Table 12: Cost of operations comparison .............................................................. 67 

Table 13: Customer complaint cost comparison ................................................... 68 

1

1 INTRODUCTION

1.1 Background of the study

From sales perspective, it is very important to understand how customer may

behave during the sales and purchasing process. As Finland is limited market for

specialized equipment, it is necessary to reach global markets efficiently. The

globalization of companies has set codes of conduct for the suppliers, which can

make it easier for the suppliers to design and conduct global marketing plans. This

can reduce the local business culture so that the purchasing process can be viewed

in more uniform way. The purchasing is becoming more centralized in global

companies, the purchases as well need to be justified as different investment are

competing against each other on a corporate level.

As the case product of this study has been on market since 2001, it is beneficial

for the company to understand the buying behavior of current customers, so that

the earlier delivery and customer experiences can be used as a tool for marketing.

Understanding the customer buying behavior gives also understanding for the

supplier to recognize the strengths and weaknesses of the current offering, and

how these may bring value to the existing and potential customers.

Although the majority of the research on organizational buying behavior has been

done in the 1970s, the core of the research is still valid. The globalization and

usage of internet for market research purposes has undermined the importance of

exhibitions and other marketing activities. This also has opened up the

competition of products and services from local to global markets. Actiw

LoadPlate is an semi-automated machine for container and trailer loading. The

markets of the product are global. In the current main markets, Finland and

Sweden, the brand has strong foothold and is seen as the market leader. Challenge

for the product, is that it is changing the decades old way of loading containers.

The challenge is that as the potential customers do not have experience in this way

of working, so it is beneficial to convey the current user experiences to new

2

markets.

1.2 Objectives and limitations of the thesis

The objective of this thesis is to study organizational buying behavior, in more

specific term, the buying decision criteria of current customers of the case

company. When buying decision criteria and the experienced benefits are mapped

by using interviews, the answers are used to figure out material for sales.

Purchasing is approached from the sales perspective. Simply put, to understand

how customers buy, and what are the factors which may affect the decision

making process.

Research questions

Company has started to improve the marketing over the internet during the year

2012. As one of key goals, is to deliver the knowledge of successful projects for

wider audiences. To reach this, it has been seen that by communicating current

customer stories, best results may be achieved. The product in question is

changing the industry standard way of working. The customer segments which are

using the solution can vary in multiple ways. Focus segments for the product has

been so far lumber, steel and port industries. These all can be divided into two sub

segments: product owners or third parties. This results as six different approaches

to customers and the possible benefits and risks. To gain understanding on how

different segments see the product the first research question is presented:

1) What has been the buying decision criteria of current customer base?

The company has been able to transform LoadPlate from project into delivery

during past years. This enables higher sales volumes without increasing

engineering and other company resources to individual unit delivery as much as in

the past. To match this improvement, marketing process must be developed as

well. To increase the marketing efficiency, marketing material is to be improved

3

as well. This brings us to the second research question:

2) How buying decision criteria and customer experiences can be turned into

customer value propositions?

1.3 Structure of the thesis

This section of the thesis details the structure and gives a brief overview of each

section of the thesis. The structure and the inputs and outputs of each section is

presented in Table 1.

The first chapter introduces the background of the study, states the research

questions, and details of the study. The objective is to give a brief overview of the

motives and the purpose of the study to the reader.

The second and third chapters include the literary review of the study. It first goes

through the original frameworks of organizational buying behavior, to broaden the

understanding on different actors regarding the purchasing process. The objective

is to gain understanding in what factors marketer can influence and to which

factors it must adapt. Following this is the chapter on customer value propositions,

focusing on customer value proposition design and value-based sales process. The

objective is to gain the required tools and methods to develop and quantify

currently used customer value propositions of case company. 

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The sixth chapter describes findings from the empirical data that was gathered. It

follows value customer value management process. It tests the currently used

customer value propositions of LoadPlate. The focus is to present the interview

findings so, that the results can be refined in later steps of customer value

management process.

The eighth and final chapter includes the conclusions that can be made from the

insights and short summary of relative insights of the literature. This chapter

contains the answers to research questions and the delimitations of the thesis.

6

2 ORGANIZATIONAL BUYING BEHAVIOR

Purpose of this chapter is to gain basic understanding on the theoretical

frameworks of organizational buying behavior. The information is being viewed

from the marketing and sales perspective, to understand how customer works and

may behave in different buying situations. The research has introduced three main

models for the organizational buying behavior. Robinson, Faris and Wind

introduced their model in 1967, Webster and Wind in 1972, and Sheth in 1973. In

1996 Johnston and Lewin introduced their model, which combines the above

models into one. The following chapter will give introduction to these models.

2.1 Robinson, Faris and Wind Model

Robinson, Faris and Wind introduced Buygrid and Buyclass models in 1967 in

their book Industrial Buying and Creative Marketing. The presented model was

first model introduced in the field of organizational buying behavior research. The

research in this study is focused on the New Task and Modified Rebuy situations.

2.1.1 BUYGRID - Model

This model is a conceptual framework which incorporates eight buy phases and

three Buyclasses. These Buyclasses are different types of buying situations which

differ in the commonness of the product type. This model was made for managers

to understand and predict the marketing task in hand and to select suitable

approach to the problem.

In Table 2 below, the Buyphases can be seen as buying process steps. These steps

can be happening simultaneously, but Robinson et al. (1967 p.13) noted that the

purchasing process usually follows the similar pattern. Almost all of the steps

from one to eight can be affected by the marketing and sales function of the

supplier.

7

Table 2: The BUYGRID Analytic Framework for Industrial Buying Situations. Adapted from Robinson etet al. al. (1967 p.14)

New

Task

Modified

Rebuy

Straight

Rebuy

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YP

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SE

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1. Anticipation or Recognition of a

problem (need) and a General Solution

2. Determination of Characteristics and

Quantity of Needed Item

3. Description of Characteristics and

Quantity of Needed Item

4. Search for and Qualification of

Potential Sources

5. Acquisition and Analysis of Proposals

6. Evaluation of Proposals and Selection

of Supplier(s)

7. Selection of an Order Routine

8. Performance Feedback

Buying situations and Buyclasses

Table 3: Distinguishing characteristics of Buying Situations. (Adapted from Robinson et al. 1967 p.25)

TYPE OF BUYING SITUATION (Buyclass)

Newness of Problem

Information Requirements

Consideration of New Alternatives

New Task High Maximum Important

Modified Rebuy Medium Moderate Limited

Straight Rebuy Low Minimal None

8

Newness of problem refers to the situation in hand: does the company have

experience in similar situations in the past. This has direct effect on the

purchasing process. If the problem is new, then more effort is put in first steps of

the buying process. The situation must be assessed and determined what kind of

solution is needed, and also the search of the potential suppliers is broader. If the

buyclass is modified rebuy, company has experience of the problem and also

knowledge of the suppliers. Thus search takes less time and effort. If the buyclass

is straight rebuy, then no assessing or searching is needed, the order is placed to

the same company as previously.

Information requirements refer to the amount and type of information which the

buying center needs to gather before they are comfortable with the level of

knowledge regarding the problem and possible solutions. If the buying situation is

new task, then vast amounts of information is gathered and analyzed in each step

of the process. If the situation is modified rebuy, then existing information can be

used and possibly updated along the process. If the situation is straight rebuy, then

possibly the only information needed is the changes in the pricing of supplier.

Consideration of new alternatives relates to the first two situations. This is

affected by two situations; knowledge of available alternatives, and the ability to

distinct the problem and the last solution to similar problem. If the buyclass is

new task, then high amount of time and effort is put in search of suppliers. In

modified rebuy situations, new alternatives are considered depending on the

experience with the current supplier.

2.1.2 Buyclasses

New task

In new task buyclass the problem has not existed before. This leads to the lack of

experience in the buying center, thus there is no past information to rely upon. To

fill the gap in the knowledge, large amounts of information must be sought to find

9

a solution to the occurred problem, and to search for suppliers. The new task

situations are not happening frequently, thus it can be difficult to anticipate. But

an external stimulus, such as governmental regulations, can create possibility to

foresee the upcoming situations. Other situations can be introduction of new

product line, thus requiring new machinery, or possible injury resulting in

investment in new safety mechanisms. From marketing perspective, it would be

highly beneficial to foresee the upcoming problems beforehand and highlight this

to the buying organization. By achieving this, it is possible for the supplier to have

effect on the scope and solution of the purchase in its favor, thus increasing the

probability to become the supplier.

The purchasing process in the new task situations will be determined by the

environmental influences. The process first narrows the possible solutions to the

problem. If the solution is capital equipment or technologically complex, the

technical staff from both parties are involved during the process. Alongside the

narrowing down, qualification of sources is done. The final specifications are set

usually after the supplier is selected, since it may be rare that multiple suppliers

propose completely identical solutions. After the solution has been found, the

economic feasibility studies and evaluations are made. The new solution always

involves risk to the buying company and the decision makers. Using known

suppliers, the risk can be reduced. The buyers inside the buying center are

primarily either information channels or handling only commercial transactions.

They do not usually possess the technical knowledge to play important role in the

decision making process. However they should not be forgotten, since they may

play crucial role in the feasibility studies. For marketer, the best opportunity may

lay in making customized solutions to the customers’ problem, although it may

only be combination of standardized products and services.

Straight rebuy

Straight rebuy situation is a continuing or recurring buying, which is handled in

routine basis. The decision is made by purchasing department on each transaction.

10

In straight rebuy, the research of the suppliers has been done earlier, leaving a list

of preferred suppliers. No new suppliers are considered between purchases. Due

the recurring nature of the purchase, the purchasers are experienced with the

information related to the purchase. These kinds of purchases can be, for example,

work gloves, raw materials, and other goods consumed in the production. The

only things changing on straight rebuy situation can be the price, delivery times,

etc. This is the most common purchase type in industrial environment. If any

changes have not been made in the procurement process, or problems have not

been arisen from the last purchases, then little to no consideration is done to

change the supplier. From marketing perspective, it is important to be in the short

list of accepted suppliers. Otherwise it may be difficult to gain access to the list.

Access may be gained if the purchaser does bidding of the contract in regular

basis.

Modified rebuy

The modified rebuy can develop from new task or straight rebuy situations. If it

develops from new task, then the company has previous purchasing experience

from similar situation and amount of work in the search process is reduced. If it

develops from straight rebuy, the reason may be bidding process or dissatisfaction

with current suppliers. In modified rebuy also additional information is required

for the decision making. Examples can be changed specification, contract details,

etc. This buying situation can be triggered by outside events, such as emergency

or also the marketer may have made the effect by his/her actions. If a marketer is

not on the preferred suppliers list, he/she may try to change the situation to make

the straight rebuy situation into modified rebuy.

The characteristics of the situation differ from the previous ones in the customers’

view on the problem and the way in solving it, in more specific, whether or not

serious consideration can be given to alternative solutions and suppliers to resolve

the problem. In modified rebuy, the vendor offerings are given new evaluation.

However, it does not necessary mean that the purchaser will change the purchased

11

item or the supplier. The re-evaluation of supplier may arise from the possibility

of cost savings, improvements in the end product or production process, or better

service offerings from alternative suppliers.

Bunn (1993 p.47-49) proposed more fine detailed model based on the original

three Buyclasses. In the study, six Buyclasses were proposed; (1) Casual

Purchase, (2) Routine Low Priority, (3) Simple Modified Rebuy, (4) Judgmental

New Task, (5) Complex Modified Rebuy, and (6) Strategic New Task. These

Buyclasses have different weighing values in terms of available choices,

perceived power of the purchaser, importance to the buying organization, and

uncertainty on the buying activities. In marketing, the original three-group

classification can be more practical to use. (Moon and Tikoo 2002 p.297).

2.2 Webster and Wind Model

Webster published his first study on the subject in 1965. This study summarizes

the buying process into four segments: (1) problem recognition; (2) organizational

assignment of buying responsibility and authority; (3) search procedures for

identifying product offerings and for establishing selection criteria; and (4) choice

procedures for evaluating and selecting among alternatives (Webster 1965 p.371).

Webster and Wind presented their model of the OBB in 1972. This model takes

into consideration the environment, organization, buying center, the individual

participants and the buying decision process.

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for new kinds of products or services for their suppliers. Government can make

new investments more attractive by handing out incentives, or create

protectionism in the market by setting high import taxes. Labor unions can create

difficult surroundings for the companies. As an example Finnish Port Laborers

can halt the Finnish exports totally by going in a strike, thus leaving their mark to

the annual GDP. This can make the investments in automation justifiable, but the

attitude of labor unions can make the implementation of automation difficult for

the companies. Trade associations can offer one path to access new markets.

Professional groups are way to get peer information about new products on the

market and also spread either positive or negative WOM (word-of-mouth) about

products. Other business firms in the market can either set competitive

atmosphere, or make it more attractive to new suppliers to enter the market. Other

social institutions, for example Finpro in Finland which does promotion for

Finnish companies abroad, can work to make direct connections between

suppliers and end customers in new markets.

The customer organization consists of communication, authority, status of the

individuals, rewards, and work processes (Webster 1972a p.14-16). All have

importance in how well the work flow in organization is working. Organizational

technology sets the level of technology. If organization is in low cost country,

then degree of automation may be low. Vice versa if organization is in developed

countries, degree of automation may be higher. This sets the limitations to the

technology which is sensible to purchase. Organization structure sets boundaries

in terms of hierarchical levels, workflow and levels of approval. Organization

structure can also be seen as divisions, where divisions can work as DMU.

Organizational goals direct the purchasing decisions, i.ex. if company has made

decision to launch new product line, it will require new machinery to adapt to new

products. This creates buying tasks to the buying center. Organizational actors are

the employees of the company within all levels and responsibility areas. These

actors form the buying center. From marketing perspective, it is important to

know, how the message about possible problem is conveyed from the user level to

the knowledge of the management. Usually it can be the users who recognize the

14

possible bottlenecks or problems in the production process during their daily

work.

The buying center is the decision making unit for each purchase. According to

Webster and Wind (1972a p.17) the buying center consists of five distinctive

roles:

Users -Members of the organization who will use the purchased products and

services.

Buyers – Members of the organization who have the formal responsibility and

authority to award the contracts with the suppliers.

Influencers – Members of the organization who have possibility to influence the

decision making process either directly or indirectly by effecting the

decision criteria in alternative supplier evaluation or by providing

information.

Deciders – Members of the organization who have authority to choose between

alternative suppliers.

Gatekeepers – Members of the organization who can control the flow of

information and materials into the buying center.

From marketing perspective, it is important to be aware of each individual in the

buying center and their roles in the decision making process. This way more

directed marketing can be done according to each individuals needs and wants.

The behavior and interaction between the buying center members is also an

important aspect to be taken into consideration when trying to influence the target

organization. Individuals can also occupy multiple roles in the buying center, i.ex.

decider can also be the buyer, or user can be influencer. The members of the

buying center can also have task and non-task related criteria for the evaluation of

15

suppliers. Task related motives are relating to the buying problem in hand and

includes the organizational criteria and guidelines for the purchasing. Non-task

criteria can be divided to two sets: achievement motives and risk-reducing

motives. With achievement motives member is trying to achieve personal

advancement or recognition. With risk-reducing motives member is trying to

transfer part of the risk to other members of the organization, or to reduce the

uncertainty related to the purchase (Webster and Wind 1972a p.19). For

marketing, information gathering within the buying center can help to reduce the

risk-reducing motives. Katrichis (1998) studied the interaction within the buying

center members. It was found out, that less than a third of the communication was

with outside members of the buying center. This is divided presumably to

multiple vendors and other parties outside the organization, thus the possibility of

one vendor to have effect on the purchasing outcome, may be small (Katrichis

1998 p.144). In the study it was discovered also that the persons who work as

information exchangers, are usually the most influential person in the purchasing

process (Katrichis 1998 p.144).

The buying center size and communication can change, depending on the

purchase situation. Johnston and Bonoma (1981 p.153) propose in their study, that

in organizations which are highly formalized, the extensivity of the buying center

is higher as well. The importance and the complexity of the purchase also have

positive effect on the amount of people involved in the buying center. When the

purchase is novel, also the lateral communication within organization is higher.

When the capital cost of investment is higher, upper levels of management are

involved also in the process. For marketing perspective, the levels of management

hierarchy must be known to plan a successful communication strategy. If the

communication is not reaching high enough, then the effort on marketing may go

to waste (Johnston and Bonoma 1981 p.154). However, in a direct marketing or

sales situation, the management levels above the buying center members may be

left unknown in a personal level to the marketer. This sets limitations to the

practical workability of the theory.

Figu

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16

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17

learning process of the individual, how much training is needed to make it

understandable to the members. The perceived roles can have effect on the

internal communication of the buying center. If high ranking manager sets the

discussion in a certain way, it may suffocate the discussion from more

experienced personnel who may have better insights of the problem which needs

to be solved by the solution.

The final decision is made in either group decision unit or by individual decision

making unit. By having the decision made in group, it reduces the risk of

individual buyer. In group, consensus needs to be made to reach the decision.

2.3 Sheth Model

The model introduced by Sheth divides the organizational buying behavior in

three aspects. First is the psychological aspect of the individuals involved. Second

is related to the conditions which precipitate the decision making between these

individuals. The third is the process of decision making and the possible conflict

resolution (Sheth 1973 p.52). Sheth has noted that three departments are most

common in the buying center: the buying personnel, quality control, and

manufacturing departments.

There are five aspects which have effect on the expectations of the buying center

members. The background of the individuals is affected by the education, role

orientation and the life style of the person. These can have positive, negative, or

neutral effect on the communication between the salesperson and the individual.

The information sources can either be result of active marketing of the supplier,

peer groups, or other sources. The level of active search will have direct effect on

how well new solutions to a problem are being sought. Perceptual distortion is a

result on how the individual perceives the marketing material and other

information and transforms it to a personal view. And finally the satisfaction with

previous purchases or brands can also have an effect on the expectations.

Ferguson et al. (2010) suggested that the negative experiences with the past

purc

lead

supp

after

poss

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look

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1973

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18

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19

presumed that if the purchase is under high time pressure, it will be made as

autonomous decision rather than joint decision to reduce the possible conflicts and

thus lost time. Perceived risk can be high if the purchase is once in a lifetime or

involves high investment costs. Then it can be presumed that it is made as a joint

decision process. The company-specific factors are organization orientation,

organization size and the degree of centralization. The orientation of the

organization can set tone, in which criteria are emphasized in the supplier

selection process. It can be as an example automation, safety, small carbon

footprint, ethicality, etc. Organization size and degree of centralization usually

walk hand-in-hand. In large corporations, the decision making is usually made as

joint decisions. And in small companies it can be autonomous decision.

The joint decision making process is conflict resolution of different views,

motives and expectations of different decision makers in the buying center. These

differences are result of the background, compensation, and also the expertise of

the individuals. The conflict resolution can be done as problem solving, where the

purchasing problem is discussed openly and task focused. In persuasion

individuals are trying to influence others to share their view in the matter.

Bargaining can be that the buying center members are trading favors, in exchange

to comply with others goals in the purchasing decision. Politicking can result as

backstabbing tactics, where the decisions are pushed through with non-task

motives. Farrell & Schroder (1996) studied the influence strategies within

organizational buying decisions. In the study, the implemented influence types

were persuasion, using outside information to generate support, advocating

personal preferences, and opposing disfavored alternatives (Farrell et al. 1996

p.299-300). These findings are aligned with the theory of Sheth; relational

persuasion was most common and effective method in reaching the consensus in

the purchasing decisions. The conflicting joint decision making process has been

questioned by the study of Thompson et al. (1998 p.703), proposes that the

conflicting buying centers are nowadays replaced with more process-driven

purchasing teams.

20

Supplier brand can also have direct effect on the supplier choice. Brown et al.

(2012 p.516) proposed that brand has positive effect on the supplier choice on low

to moderate importance purchases, and also when the buying organization is

small. In moderate to high importance purchases the brand relevance decreases. In

low to moderate importance purchases, the brand may give the purchaser feeling,

that it is safe choice. In small organizations the search process may limit only

known brands, which usually can be easier to know and find. Unknown brands

may suffer from lack in marketing budget, which makes the companies harder to

find. In important purchases, more time and effort is placed on the purchasing

process overall, which can result in more serious consideration of less known

brands.

For marketer, it is worthwhile to understand the backgrounds and the motives of

the buying center members. This way, the communication can be planned and it is

possible to have effect on the internal communication, by providing suitable

information for all group members. As consultation was found as effective

method to influence the decision making, it is important to fully understand the

needs and wants of the members. With this, it is easier to construct solution,

which covers the expected risks of the members. Wilson et al. (1991 p. 464)

proposed in their study, that if the supplier selection is done as group decision

process, it is important to gain support from multiple members of the buying

center in the case that if the selection is done by voting.

2.4 Johnston and Lewin Model

The study of Johnston and Lewin (1996), is combining the buying behavior

models of Robinson et.al (1967), Webster and Wind (1972a p.15), and Sheth

(1973 p.51). In addition to the original models, Johnston and Lewin have

introduced two new factors into the framework; Decision rules can be formal rules

and procedures of the organization. These are influenced by the organizational,

environmental, seller and purchaser characteristics (Johnston & Lewin 1996 p.4).

Role stress is more focused on individuals, rather than organization. Role stress is

influ

addi

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21

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22

can be influenced by the marketer, it must be taken into consideration that what

characteristics are affecting each part of the purchasing process, and how to

clearly communicate with each buying center member. By understanding the

motives of both, organization and individual, marketer can have better persuasion

on individual level.

As the case organization of the study has organic sales process, it is important to

have understanding of customer organizations in general. By having base

understanding of organizational buying behavior, it can have impact when

designing account strategies.

One of ways to have influence in the organizational buying behavior, is to

communicate reference case stories and communicate the possible value gained

from changing the supplier or to communicate the customer gained value from

previous deliveries. The next chapter is explaining the customer value

propositions, how to construct customer value propositions and how to prove the

customer value propositions.

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23

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24

3.1 Value Conceptualization

As the value propositions are directed to the management, which in current times

can be very strained in time, which requires the propositions to be easily

transferrable into monetary value. The value can be understood as what the

customer receives in exchange for the purchasing price. The benefits do not

change whether the price is adjusted up or down, but has effect on the willingness

to invest. When presenting the value of an offering to the customer, marketer must

remember that customer always can compare the offering to the next best

alternative. Anderson et al. (2007 p.25) list four different alternative types:

1) Competitors offering with comparable or alternative technology to fulfill

the customer’s requirements and preferences.

2) Customers make or buy decision.

3) The status quo (not doing anything).

4) Previous offering from the same supplier.

The value can be put into following equation (Anderson et al. (2007 p.25):

(Valuef – Pricef) > (Valuea – Pricea)

Where Valuef and Pricef are the values of the suppliers offering and Valuea and

Pricea are the values of next best offering. In this formula, the price is reduced

from the value, leaving the two comparable against one another.

Proposed market offering of the marketer may deliver benefits to the customer,

such as increased profits and revenue, and cost savings. But also the next best

alternative may bring these. The market offerings may alter in ways it conveys

value in technical, service, and economic ways. The ways to communicate own

offering can be done in three ways; points of parity, points of difference and

points of contention. The explanations for these can be found below in Table 4.

25

Table 4: Building Blocks of a Successful Customer Value Proposition (Anderson et al. 2006 p.6)

Element Explanation

Points of Parity Elements which have the same performance or

functionality as the next best alternative

Points of Difference Elements which are superior or inferior compared to

the next best alternative

Points of Contention Elements which the supplier and customer view the

performance of suppliers product compared to the

next best alternative differently.

Anderson et al. (2006, p.3) propose three different value proposition types; all

benefits, favorable points of difference, and resonating focus. Summary of the

types can be found below in Table 5. All benefits proposition lists all the possible

benefits what the certain solution may bring; with no regard are the benefits

relative to the customer. This proposition class is the easiest to construct, since it

does not require detailed knowledge of competition or customer case in hand

(Anderson et al. 2006 p.3). The drawback of the all benefits proposition is that if

the benefit has no value for the customer, it can undermine the justification.

Another pitfall in all benefits proposition is that there can be points of parity with

the next best alternative, which reduces the power of those few points of

difference in the propositions (Anderson et al. 2006 p.3).

Favorable points of difference propositions recognize that the customer has an

alternative in choosing the supplier. The suppliers must make their offerings

different from the alternative suppliers, which requires knowledge in the

competing offers or finding the best solution to the customers’ problem (Anderson

et al. 2006 p.4). Mere knowledge on the points of difference does not convey the

value to the customer directly; it must be demonstrated to the customer which

points bring the most value to him or her. Without knowledge on the customers’

requirements, suppliers have the potential to emphasize points of difference which

do not bring much value to the customer (Anderson et al. 2006 p.4). This can be a

26

pitfall for the value proposition.

The best practice for value propositions is the resonating focus (Anderson et al.

2006 p.4). With this proposition suppliers have deep understanding in the

customer business and challenges and thus can convey simple yet powerful

customer value propositions. Such value propositions can be provided by making

the offerings superior on few, selected elements which matter the most to the

target customers. This value of superior performance should be documented and

demonstrated to the customer in a way that delivers a sophisticated understanding

of the customers’ business and the priorities (Anderson et al. 2006 p.4). With

resonating focus value proposals, more is not better when compared to all benefits

value propositions. Resonating focus proposals focus on one or two points of

difference which, will also in the future, deliver greatest value to the customers.

This proposition type may also include points of parity when it is required by the

target customers even to consider the offerings or when supplier wants to correct

misconceptions of the customer (Anderson et al. 2006 p.4). One of most important

parts of effective value proposition construction can be that the points of parity

need to be stressed, so that the customer does not mistake those as points of

difference in favor of next best offering (Anderson et al. 2006 p.5).

27

Table 5: Which Alternative Conveys Value to Customers?. Adapted from Anderson et al. (2006) p.5

VALUE

PROPOSITION

ALL BENEFITS FAVORABLE

POINTS OF

DIFFERENCE

RESONATING

FOCUS

Consists of: All benefits customers

receive from a market

offering

All favorable points of

difference a market

offering has relative to

the next best alternative

The one or two points

of difference (and,

perhaps, a point of

parity) whose improve-

ment will deliver the

greatest value to the

customer for the

foreseeable future

Answers the

customer

questions

“Why should our firm

purchase your

offering?”

“Why should our firm

purchase your offering

instead of your

competitor’s?”

“What is most

worthwhile for our firm

to keep in mind about

your offering?”

Requires: Knowledge of own

market offering

Knowledge of own

market offering and

next best alternative

Knowledge of how

own market offering

delivers superior value

to customers compared

with next best

alternative

Has the potential

pitfall:

Benefit assertion Value presumption Requires customer

value research

3.2 Constructing Customer Value Propositions

For suppliers it is important to have the knowledge of own offerings standing

against the next best alternative. When listing the possible benefits which market

offering may bring to the customers, it should be done so that both, points of

difference and points of parities are looked in unbiased manner. Doing the listing,

requires that the workgroup, involving supplier individuals from various

functional areas, decides which of the benefits may bring value to certain

customer type and also decide what might be the next best alternative. After this

28

the benefits are evaluated against this alternative. During the listing, also the

elements which are in favor of the next best alternative should be included

(Anderson et al. 2007 p.43). This way supplier can more accurately assess the

differences of what the offers provide.

When the internal assessment of the product value offering is done, it is best to

have customer feedback on the factors which may bring value to the customer,

and in what extent. Anderson, Jain and Chintagunta (1993) proposed in their study

multiple methods to assess the value to the customers. This is the work process

where supplier organization estimates the monetary benefits what proposed

market offering may bring to the customer.

- Internal Engineering Assessment: In this method suppliers own engineers or

scientists conduct laboratory tests to provide estimate on the value.

- Field Value-in-Use Assessment: Comprehensive listings of benefit and cost

elements related to the suppliers offering versus next best offering is collected by

either supplier personnel or third party. This data collection requires customer

cooperation and participation to arrive into customer value estimations.

Assumptions are made to assign monetary values to compare the offerings.

- Indirect Survey Questions: With this method, current users are surveyed how

one or more changes in the currently used market offering have effect in the

company operations. Combining this with currently used information, estimates

can be made to create monetary terms for each individual change.

- Focus Group Value Assessment: This is a qualitative approach, where focus

group is presented potential offerings or concepts to gain insight what value these

might bring to the customer operations.

- Direct Survey Questions: Participants in this method are directly asked what

value presented market offering would bring to their organization.

29

- Conjoint Analysis: With this method the potential market offering judgments of

the research participants are statistically transformed into estimates of value. The

participants are asked by personal interviews or telephone-mail-telephone

research method to evaluate set of potential market offerings. Offerings are

viewed on separate cards in which attribute sets, which are being studied, are

listed. These lists have also the specific level of attribute, which each offering

possesses.

- Benchmarks: Survey participants are given the description of current industry

standard which acts as a benchmark. Participants are then asked what would be

acceptable increase or decrease in the price they would be willing to pay if some

of these attributes are changed.

- Compositional Approach: In this study method the value placed on selected

attributes is asked directly from the participants, while some of the attributes are

being reviewed with fixed value. When the assessment is completed with each of

the attributes, the values can be added to provide estimates of market offerings to

the participants company. Though the method is easy to use, the shortcoming is

that the given value of selected attributes may be greater than the value of the

offering as a whole. The method has three steps in perception gathering. First, the

participants indicate completely unacceptable attribute levels; if the attribute has

that level, it is not being considered. Second, participants designate the most and

least preferred attribute levels on a scale from 1-10. Third, the participants select

the most preferred attribute as a 10, from which the other attributes are being rated

from 1-10 in relation to it.

Value word equations help supplier to show both, points of parity and points of

contention, compared to the next best alternative (Anderson et al. 2006 p.6). A

value word equation can show in simple mathematical equations (i.ex. – and * )

how to understand the differences in the suppliers offering and the competitive

offering. These equations can be as simple as comparing power consumption and

30

the savings what can be gained from it, such as Rockwell Automation has done it

below (Anderson et al. 2007 p.54-55):

[kW spent x nr of operating hours per annum x $ per kWh x number of

years system solution in operation] Competitor solution - [kW spent x nr of

operating hours per annum x $ per kWh x number of years system solution

in operation] Rockwell automation solution

3.3 Proving Value Propositions

To make value propositions persuasive, suppliers must be able to prove and

document them (Anderson et al. 2007 p.59). By using value word equations, these

can be easily communicated, but those need to have factual data from customer

value research behind them. The goal of the research is to generate knowledge on

how the offering generates value or reduces costs for the customers in comparison

to the next best alternative. Secondary goal is to learn how this value can vary

between customers (Anderson et al. 2007 p.60). This helps in new customer

segmentation.

To have solid value research findings, customer cooperation is a necessity. To

gain the customer to share their time and resources, the supplier needs to convince

them. Possible gains for the customer can be research findings and cost-savings

recommendations (Anderson et al. 2007 p.62). The customers usually participate

in these studies for one (or several) of four basic reasons: an opportunity to

benchmark, earlier access to some new product or service, get meaningfully

lower price, or a low-cost resource to better understand their business (Anderson

et al. 2007 p.63). Data gathering is started by showing to the customers the

internally listed value elements, which include the points of parity and points of

difference. If disagreement arises from points of contention, those can work as

motivators for the customer to participate more deeply into the data gathering.

When discussing the points of difference and contention, members of the team

should discuss what kind of data the customer currently generates, or is able to

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he delivery a

achieved (A

GRID mode

ed selling is

he value of t

is importan

mer as wel

s the offeri

flect the ow

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31

Anderson et

hinks might

e difficult to

e customers

, it is then

ays. One is

ustomer can

ware which

ed on value

onstrate the

and include

Anderson et

l of buying

s best used,

the offering

nt to have

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wn offering

ss (Adapted

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e

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32

When in cooperation with customer, goals are set mutually. This can help to

quantify the value for the offering. When quantifying the impact of the solution to

the customer, validation of the value analysis results should be validated with

multiple customer representatives. If the value propositions are made without

customer interaction, the customer may be skeptical in believing the numbers

behind the assumptions (Töytäri et al. 2011 p.500). Business case can be one

persuasive way to do value based selling. Anderson et al. (2007 p.66) propose five

points which should be included in the business case:

1) What actions are recommended based on the customer value research?

2) Resources needed to accomplish the recommended changes?

3) Specific concerns in the implementation?

4) Milestones what can be charted to follow the progress in the change?

5) Increased profitability if the business case would be approved?

In combination with the business case, suppliers can present solid customer

references. These can be used to provide evidence about experience in supplying

similar offerings, show market position, demonstrate the delivered value (Jalkala

& Salminen 2010 p.981), and reduce customer perceived risk (Salminen & Möller

2006 p.23). The reference cases can bring more leverage to the customer, if

previous case studies have been verified with the customers and also can show the

gains in monetary terms. Difficulty may lie in getting the acceptance from the

customer to show this information, since in some cases the implementation may

have brought the customer a competitive advantage. When validating the data of

the supplied offering, it can serve as screening criteria for new customers, thus

creating a link to the beginning of the sales process (see Figure 6 above).

By delivering value to customers, new kind of investments can be introduced to

customers. In summary, the value delivering has been one of key topics in

marketing research and managerial literature during past years. However as the

challenge for the suppliers is to communicate the value, more focus should be put

into showing the value in factual and monetary terms. One of key challenges may

33

be to get current customers to opt-in to the value documentation programs, but it

is also a possibility to tie closer relations with the current customers.

34

4 CASE: CONTAINER LOADING AUTOMATION

4.1 Case company presentation

Actiw Oy is small family owned enterprise located in Naarajärvi, Finland. The

company as its current form was founded in 2008, but the products have been in

market for three decades. Originally Actiw Oy was part of Naaraharju Oy, which

used to do steel fabrications such as bridges, steel building frames and automated

warehouses.

Actiw Oy has three separate business segments; Actiw Systems, Actiw LoadPlate

and Customer care. The Actiw Systems segment includes automated warehouse,

LoadMatic, LoadForm and other automated solutions. From managerial point-of-

view, LoadPlate is regarded more as machinery, but as the market is young for

automated container stuffing equipment, it can be still treated as solution.

Figure 7. Actiw Oy Turnover and profit margin

Actiw Oy can be defined as engineering company with great focus on project

deliveries. This discontinuity creates challenges in steady turnover. This is in

correlation with the D-U-C – framework (Tikkanen & Aspara 1998 p.49) which

2,8

11,6

3,3

6,6

4% 7% 1% 2%0,0

2,0

4,0

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2009 2010 2011 2012

Turnover (M€)

Profit margin %

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LoadPlate i

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t alike. In

o maintain

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35

ese figures,

where the

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36

Figure 9: Cumulative LoadPlate sales 2001-2014

The customer types of LoadPlate can be divided into two user types: 3PL and

producer. 3PL is abbreviation from third party logistics, an service provider for

other companies. In this instance 3PL is providing container stuffing service for

material producers, such as sawmills. 3PL providers are common in Nordic

markets, as the access to containers can be limited, or the distance to transport the

goods from the factory to the port is more efficiently done with a truck or a train.

Producer is both producing and stuffing the containers in the factory premises.

This is feasible arrangement, if the production is close to port or availability of

containers is secured in other ways.

Actiw Systems

Actiw Systems is automated storing and retrieval system (ASRS). Actiw has

delivered dozens of these systems around the world from the late 1980s. This

system is highly applicable as manufacturing and logistics center warehousing

needs. The greatest benefit of Actiw storage is the high input / output rate. Typical

delivery value ranges from 3 to 6 million Euros, but can be up to 11 million as

well. Market focus on Actiw Systems is in fast moving consumer goods and

beverage industry. Example key accounts which Actiw has are Procter & Gamble

0

5

10

15

20

25

30

35

3PL

Producer

and

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hand

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te. Differen

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s, which y

al benefits

which is in

pment than

project price

mical indus

dardized pal

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37

nce on the

pallets. On

can be done

yields great

come from

correlation

LoadPlate,

e to approx.

stry, where

llets.

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38

Table 6: Actiw Oy product portfolio

Product Main market Price range (k€) Customer

industries

LoadPlate Scandinavia 170 – 230 Sawn timber,

Storage Global 2 500 – 12 000 FMCG, beverage

LoadMatic Global 350 - Petrochemical,

FMCG

4.3 Standard cargo spaces

Sea containers are thought to be one metric for international trade. Container

dimensions are set by ISO organization, and the dimensions are set in the ISO 668

standard. In international trade, the most common containers are 20ft dry

container, 40ft dry container, and the 40ft high cube container. More specialized

container types can be 20ft and 40ft open top containers and flat rack containers.

All container sizes follow the same external dimensions. Standard measurement is

TEU, which means Twenty feet Equivalent Unit. In Europe and in northern parts

of Africa 45ft container is also quite common, although it is considered as special

container in global markets.

Table 7: Container External and Internal Dimension according to ISO 668 and

ISO 1496-1

Length Width Height

Dimensions 20’

2 058 mm

40’ 12 192

mm

45’ 13 716

mm

8’ 2 438 mm

8’6’’ 2 591 mm

9’6’’ 2 896 mm

Minimum Internal Dimensions

5 867 mm

19’3”

11 998 mm

39’4⅜”

13 532 mm

44’4¾”

2 330 mm

7’7¾”

2 350 mm

7’8½”

2 655 mm

8’8 ⅛” Minimum Door Opening Dimensions

- -

- -

- -

2 286 mm 7’6”

2 261 mm 7’5”

2566 mm 8’5’’

For lumber loading the 40ft high cube container is the most common choice. With

this

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the market

mpetition is s

size the theo

for vast ma

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mensions of

High cube

Open-top c

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ommonly u

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to load ov

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oretical max

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Source: Hap

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39

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The container loading has been almost the same from the invention of sea

containers as those are today known. International Standardization Organization

(ISO) set the first standard dimensions for the intermodal containers. Standard sea

containers have only opening at the door, which limits the handling of the goods.

For more complex cargo there are available open-top containers, of which the roof

is possible to open. The availability of the open-top containers is being reduced

annually due higher demand of containers and the fact that shipping lines, who

rent the containers for their customers, do not produce the open-top containers in

high volumes. This leads to the challenge to either pay high rents for the open-top

containers, or find alternative ways to load complex cargo. Complex cargo can be

described as loads which are difficult to load in conventional methods, because of

the length, weight, height, width, location of center-of-gravity, or the combination

of different size boxes to utilize the cargo space in most efficient way.

To handle complex cargo into standard sea containers, different kind of

attachments have been developed to the market. The challenge with these kinds of

attachments is that these do not have distance control over the goods. This may

lead either damage to goods or the container. To control the distance, it is required

that there is a worker inside the container, which is rather large health and safety

hazard.

For lumber containerization the loading method has been rather unchanged during

the years. It requires at least two large forklifts, one to lift the lumber bundles and

second to push the goods inside the container. In addition to the two forklift

drivers there may be additional footman to check that everything is in order. This

method is suitable when the lumber packages are all the same length, the height

has clearing from the container door opening and the packet width is restricted so

that there is large tolerance between the container walls and the packages. By

reducing this tolerance, higher loading volumes can be reached, which has direct

saving in container shipping costs.

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42

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h is mostly

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43

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acturer. It is

machine and

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44

- Easy load forming: When load forming is done outside the container,

products can be placed in free order.

- Worker safety: No workers are needed inside container during loading,

resulting in worker safety. Also when less people are involved in the

loading process, risk is reduced.

- Increased fill rate: As container is aligned and locked with LoadPlate, it

gives greater accuracy and control in the loading. This way producers can

optimize the product dimensions in a way that the container fill rate is

increased.

- Less product damages: Better control over the loading process is reducing

the product damages. LoadPlate also does not force the goods inside

container when comparing against normal working methods.

- Increased productivity: Productivity can be increased by reducing the

work steps in the container loading process. In most cases containers need

to be placed on the ground for loading, requiring either specialized

container trailer or container handling equipment. Other metrics to

evaluate productivity, can be how many containers per shift are being

loaded, or how many workers are needed to load each container.

- Reduced operating costs: Running and lifecycle costs of LoadPlate are

rather small. Since the unit is only consuming electricity for short periods

of time, part and fuel consumption is rather minimal.

- Decreased freight costs: Switching from special containers to standard

containers can reduce the overall supply chain cost. Also increased fill rate

can drop the shipping costs.

45

- Better supply chain control: In cases where producer is taking charge of

the container loading process, gives better control over the goods. Each

handling can be subject to product damages, if handlings can be reduced,

product quality can improve.

- Simple and easy to use, and maintain: Since the design of the LoadPlate is

rather simple, but has seen evolution through the years, lots of small

details have been fixed. Almost all of the components are off-the-shelf and

as standardized as possible. Key goal here has been that the company does

not need to have large warehouse for spare parts, and also if component

gets broken, customer is able to purchase identical part from local

suppliers, which leads to shorter down-time of the equipment.

The current value propositions can be used to match different buying center

members needs and wants. For example Logistics Managers can be interested to

use standard sea containers instead of open-top containers, and to increase fill

rates of the containers, as these have direct effect on total shipping costs.

Maintenance managers may appreciate the easy maintenance. Reliability and easy

load forming are thought to be key drivers for operational managers.

Current value propositions are used in most steps of the Buyphases. Some

arguments can be used in the beginning to gain the attention of potential customer

in general level. In later phases these can be calculated more case specific, on how

the propositions would change the current operations.

5

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46

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47

recognized patterns or relationships among the variables within and across the

cases and the underlying theory (Eisenhardt et al. 2007, p.25). The theories are

created by using one or multiple cases to theoretical constructs, propositions or

mid-range theories from case-based, empirical evidence (Eisenhardt & Graebner,

2007, p.25). Case study is found to be useful to answer research question types

“how” and “why”, the kinds of questions which are used to explain events or

phenomenon which is studied.

The case study research framework of Yin (2009, p.2) is presented in Figure 17.

The process can be seen as linear but still has iterative characteristics to it since

the consequent steps can have feedback function to the next and previous steps of

the process. This way the researcher may alternate the approach of the research

questionnaire along the interview process is ongoing. This allows the feedback to

guide the depth to the interview in ways which might otherwise be unaddressed in

the beginning.

The research was planned by using the framework presented in Figure 17. The

questionnaire was based on previous studies concluded in the case company and

by the market knowledge which had been previously unverified and

undocumented. The background information of the LoadPlate was based on the

experiences of the researcher who has three year experience on the equipment in

technical, marketing, sales, and economical perspective.

The preparation phase involved in combining the existing value propositions

which had no documented proof, but had been internal speculation within the

company. Then the questionnaire was designed to test these speculations.

The interviews were conducted during business trips, which limited the available

time for interviews and the availability of interviewees. As part of the customers

have had the unit for over a decade, the original buying center members were

difficult reach due organizational changes, retirements and unfortunately due

death from illness. The complete unit list can be seen on Appendix I

48

Table 8: Conducted interviews by customer segments

Lumber Steel Other

Producer UPM Timber – FIN Stora Enso – AT Bergkvist-Insjön – SWE Karl Hedin - SWE

Sandvik Materials Technology – SWE,

FPC Tissue – Chile

3PL Sören Thyr – SWE ILP-Group – FIN

Gävle Stuveribolaget – SWE

Eskilstuna Kommun - SWE

The objective of the customer interviews was twofold: 1) first part of the

interview is to create market knowledge related to product and the changes in the

operating environment. This is to gain internal understanding within the case

company, since there is no documented evidence. And 2) build case studies of the

unit delivery for marketing purpose.

The interview questions were separated into five groups:

Background of the individual

Did the customer experience any risk in the implementation of new

working method?

Buying decision criteria of the company?

Had the LoadPlate brought them business or operational value?

Comments on the product and the co-operation between the companies.

Intent was to interview two operational areas within the customer organization; 1)

Managerial level and 2) operative level. Each operational area would have

specified questions to focus on their daily activities. From managerial level, such

as CEO, CFO and CMO, the goal was to find if LoadPlate has brought strategic

advantage to the business, how the company was leveraging LoadPlate in their

marketing and bidding purposes, what has been the actual return on investment

49

with the LoadPlate, amount of customer complaints before and after the

investment regarding product damages, cost of these complaints. From operative

level the key areas were operative planning and daily operations. From this level,

the focus was on how LoadPlate has effected planning, effects on safety and the

actual user experience; such as what is difficult, what is obsolete, and what could

be improved. By investigating the buying center members, it is possible to

understand how many managerial layers can be involved in the purchasing

process.

5.2 Data sources and content analysis

The empirical data was obtained through 13 interviews. In total 16 interviews

were conducted during the research process, and the first three interviews were

conducted as a pilot study with much wider questionnaire form. As the focus of

the study changed between the two interview sets, the results are not fully

comparable. However, some of the insights gained from the first three interviews

were used in the study as they state the value what the customer had gained.

The interviews were conducted in companies which are current LoadPlate

customers. The ownership time of the equipment is ranging between half a year to

12 years. During the interviews some of the questions were left unasked, since the

researcher had personal experience in the complete marketing and sales

knowledge from the first contact to the installation of the equipment. Interviews

were conducted during sales trips, which limited the maximum duration and the

amount of interviews.

50

Table 9: Conducted interviews

Title Company Country Interview

type

Duration

Commercial

manager

Forestal y Paperla

Concepcion

Chile In-person 14min

Tissue line manager Forestal y Paperla

Concepcion

Chile In-person 19min

General Manager Forestal y Paperla

Concepcion

Chile In-person 21min

Logistics developer Eskilstuna

Kommunfastighet

Sweden In-person 18min

Manager Sören Thyr Sweden In-person 38min

Foreman Gävle Stuveribolaget Sweden In-person 12min

Terminal manager Gävle Stuveribolaget Sweden In-person 20min

Logistics manager Bergkvist-Insjön Sweden In-person 35min

Logistics planner Bergkvist-Insjön Sweden In-person 13min

Logistics planner Karl Hedin Sågverk Sweden In-person 16min

Global coordination

manager

Sandvik Materials

Technology

Sweden In-person 38min

Inbound service

center manager

Sandvik Materials

Technology

Sweden In-person 30min

Foreman ILP-Group Finland In-person 27min

The interviews were recorded and later transcribed into text. Interviews were

divided by market segments and analyzed.

6

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52

workers limit the output of the factory.

Variations in organizational characteristics were found in the interview. The size

of the company has been noted to have factor in the sales cycle time. The larger

the company, the more time it takes. The tasks and goals of the purchase had been

varying between the companies. In multiple cases however, the motivation for the

purchase had been to be the forerunner in the advance in technological solutions

The initial impression within Actiw had been that the customers may perceive risk

in implementing the solution. This was proven to be misconception. In all

interview companies, a reference visit and/or contact details of reference

customers were given to the buying center members. In most cases test loadings

had been done at the premises of existing customers. The buy tasks of the

customers have been either new buy situations or modified rebuys. In new buy

situations the investigation period usually takes longer time and involves more

people in the buying center, and in modified rebuy situations the buying center is

smaller and not as much investigation is required. This finding is in line with the

RFW theory of the buying center size and information requirements in new buy

versus modified rebuy situations. Importance of the purchase was found to be

altering in purchasing motives. Some customers in the Nordics are required to use

LoadPlate for the products of their customer. Related to this, some customers have

purchased the equipment to attract new customers by offering service different to

the competition. In some cases second unit was purchased to increase the

reliability of the supply chain, so that the peak loading hours can be divided to

two machines, or just to increase the work capacity to serve more customers.

The seller characteristics were found to be reliable through all interviews. The

price of the offering was mentioned to be relatively high in some interviews, but

investment was found reasonable if daily container volumes are stable. Product

and the quality of the equipment were appreciated by the owners. The service was

mentioned in couple of instances. Positive feedback was received from using

standard components and good operating manual which includes maintenance

53

information so that the customer is able to do the service maintenance themselves.

Negative feedback was received from Chile, where the long distance and the time

difference were seen as risk factors for service. Image of the product was seen in a

positive perspective. One Swedish customer mentioned the following:

“In the business every machine you use to load containers, you use the

name LoadPlate. But it’s not the same. We wanted to have the best machine.

And when I talk about the best, I talk about the one which has been sold the

most on this area.”

In larger companies, the buying center size was larger and cross functional (I.ex.

Sandvik Materials Technology), where purchasing, managers, operational level,

and different installation locations were part of the buying center. After the

buying center had made case study of the investment, it was getting accepted by

the board of directors. In smaller companies the purchasing has been very straight

forward. The buying center was involving in most cases upper management,

maintenance and operations planning. In case of modified rebuy situations, only

management was involved.

Information source which have been used in Scandinavian countries, was mostly

word-of-mouth. It has been seen that in more cases the producer of the product is

demanding the service from their suppliers. Other information sources mentioned

have been internet and video streaming services, such as Youtube. In new task

purchase situations, the amount of information needed is relatively high. This can

be explained by the newness of the technology when compared to forklift trucks.

The education of the customers has been seen to yield positive consequences and

necessity since the working method can in best cases change the working methods

greatly. The active search of the customers has been seen to raise the amount of

enquiries during the past years. Reason behind this can be either the

dissatisfaction of the current situation or the increased market knowledge that

solutions to automated loading exist.

54

Participant characteristics have had impact in sales situations. Personnel with

technical background have more interest in the technical aspects and the

functionality of the equipment, whereas customers with financial or managerial

background want to see the figures behind.

6.2 Buying decision criteria of the current customer base

From the interviews, several explanations for the reasons buying the LoadPlate

were discovered. In the lumber industry for the third party subcontractors, the

purchase motives have been to increase the capacity and to respond to customer

demand. In current markets, LoadPlate is recognized to be gentle loading method,

which does not damage the products. Some sawmills do not award the business to

subcontractors if they are using conventional container loading methods. This is

specially appreciated, when the products are going to Japanese markets, where the

product quality is highly appreciated. One customer recently expanded the

operations to new area, where LoadPlate has been creating market disturbance

inside the port. Second customer told the reason to be just to create market

disturbance in the area and also to use LoadPlate as a marketing asset towards

new customers.

For steel customers the purchase motivations were increasing the safety during the

containerization process and to secure the container capacity. The project involved

container loading and unloading solutions which were distributed globally in the

production units. This way the customer is able to use standard containers in the

global transportation, where they refine the goods at different factories. The

estimated ROI has been under two years.

The purchase behavior had been following almost identical in all cases. The initial

contact had been made after either colleague or peer had seen LoadPlate at

existing customer which had created an interest in the equipment. After this

customer had contacted Actiw and requested for budgetary price to understand the

scale of investment. Budgetary quotation is easy to provide as the equipment is

55

currently sold with cost-plus pricing policy. If the quotation had been feasible and

the customer had understood the possible gains from the investment, an internal

study was made within the customer organization, while Actiw has provided

numbers for energy consumption, running cost, and so on. If the investment has

been seen feasible for the customer, then next step has usually been reference visit

to existing customer. During the visit potential customers usually realize possible

changes what they would need to have and the quotation is adjusted to these

requests, as the vision of the investment is more concrete. If the customer

reference visit is successful, the probability in gaining the business is usually high.

6.3 Identified benefits of LoadPlate

The interviewed customer companies were divided into different customer

segments: third parties, customers who do container loading in behalf of producer,

and to producers, who containerize the goods themselves. As the interviews were

not directly focused to confirm the value propositions of LoadPlate, this part of

the study tries to find connections to the internal value assessments and develop it

further.

6.3.1 Third party customers

As third party producers can generate value in both directions of the supply chain,

to the customers who manufacture the products and to their customers’ customers.

Their position can be stronger or weaker against the manufacturer, depending on

the customer organizations focus points in their operations. In some cases

manufacturer has made strategic decision to outsource the container loading and

other logistics if it is not their core business. Second factor in Scandinavian

countries is the availability of empty containers in inland. For example sawmills

can be located in North Karelian region, from where the distance to the port is

very long and it is not economically feasible to transport empty containers so far

from the port. Also if the producer is small and the export volumes are volatile,

56

meaning that there is no stable workload to stuff containers, it may not be feasible

to invest in such equipment at the factory, whereas third party operators can

combine multiple small streams to justify the investment. Some value

propositions have no impact on the third party suppliers business. For example

switching from special containers to standard containers does not bring any value

or savings for the subcontractor, since they are not responsible in renting the

containers, and thus do not pay the additional cost of specialized containers.

Forestry products

In total three interviews were conducted on companies which do subcontracted

containerization for lumber products. Identified value factors for this segment

were following:

- Less product damages: The product damages are possible to inspect only

after the container has reached the destination for discharging. With

LoadPlate it is relatively see if the product is going to be damaged, if the

packages do not fit through the guiding rollers on the side of the

LoadPlate, it will not fit through the container door opening. Though

lumber package dimensions have been designed according to the container

dimensions, the boards may have shifted during the road or rail

transportation. The runners, boards that go sideways on the bottom of the

package, may also be damaged. This is more common during winter

conditions, when minus temperature can cause weakening of the plastic

strapping. For more expensive product types such as glulam, a glue

laminated timber, the producers are demanding LoadPlate for the loading.

Normal forklift pushing is not acceptable method for that product group.

“I think it (customer reclamations) is less than 1% that are

disappointed. But often it is not with the LoadPlate. Only when we

have pushed it in on customer request.”

57

- Better space utilization: Sawmills who use third party which has

LoadPlate, have been able to design the loads so that all the space inside

the container is utilized. In some instances sawmills do not recognize that

the door opening dimension has smaller dimensions than the internal

dimensions of the container.

“The opening of the container is the maximum height is the limiting

factor. 11,94 and 2,32 is the best dimension. But they try to do the

packages by the container.”

- Easy load forming: The LoadPlate has given the customers to make more

difficult loadings. They still use conventional methods, pushing the timber

in with forklifts, but only in cases where there is tolerance in all directions.

- Improved worker safety: Customers have been able to reduce the

workforce in the containerization. As there are no workers walking

alongside the heavy machinery, it reduces the risk of injuries.

“Yes, there are no people running around. We haven't had any

accidents in the area.”

- Increased productivity: The customer has been able to change the

container loading procedure so, that single employee is in charge of

loading the container.

Steel products

- Easy load forming: With steel products, the load forming procedure before

was to handle one sheet at a time with big forklift. The new warehouse

where LoadPlate is located, was designed so, that the steel plates are being

handled with overhead crane equipped with steel plate actuator.

58

“Before we take one steel package at a time, because for 12m you 

can  have  only  one  5tn  steel  plate  at  a  time.  So  it was  very  time 

consuming at a time.”

- Worker safety: Switching from forklift loading to loading with LoadPlate

had made impact in worker safety. The workers do not need to be inside

container to unhook chains or steel wires which are typically used to lift

the steel plates.

“Before when you used to go inside the container with the 12m long

steel. If you sit inside the forklift and you move the steering wheel

only a little bit, 1cm, you can hurt someone inside the container.”

- Less product damages: Using equipment, which is specially designed for

the handling of certain products, always reduces the risk of damages.

Though steel can be visualized as a product which is not easy to damage,

the packaging however can be very delicate.

“Before with the forklift, we put wires, some chains inside the

container and it always cuts the package a little bit. So now it is a

lot better.”

- Increased productivity: The customers have been able to reduce the

workforce required in the container loading operations and also to reduce

the loading time as mentioned above.

“The way we do here, we only need only two men to load plates into

container. If we wouldn't have the machine, then I think we would

need many more people.”

- Reduced operating costs: Operating costs have been reduced at the

customers after the implementation as fewer workers are needed for the

59

operations.

6.3.2 Producers

In the study, total of eight interviews were conducted with producers, of which six

at forestry product manufacturers and two at steel mill. Three of the forestry

product interviews were conducted during the pilot study phase.

Forestry products

- Easy load forming: When the solution has been applied at the mills, the

customers have been able to form different sizes of packages in containers.

With typical forklift loading method, it would be possible to load only four

packages at a time (see Figure 13 above), which are identical in length.

“The regular working method sets boundaries to effective loading. It

is effective to load only four stacks in one container. With LoadPlate

it is possible to load ten stacks of different sizes in one container.”

- Worker safety: Reducing the workers involved in the loading process has

increased the safety also at sawmills.

- Increased fill rate: Sawmills have been able to utilize the filling rates of

the containers. One customer has possibility to compare the container fill

rates, since they fill containers at a port which does not have LoadPlate,

and also directly at sawmill. In comparison, at the sawmill they could load

0% to 1,6% more lumber in container, depending on the destination.

- Less product damages: When the lumber is loaded directly at the sawmill,

multiple handling steps are being reduced from the overall supply chain.

Since each of the handling is subject to damage the goods,

60

- Increased productivity: One customer was able to transfer all the container

loadings from the port to the sawmill. Customer has been able to

streamline the warehousing and the shipping process so, that the

warehouse space is rather minimal and can carry approximately one week

worth of production.

- Reduced operating costs: Customers who have applied the unit at

sawmill, have been able to reduce operating costs by removing one forklift

and the forklift driver to other duties. In these instances the overall costs

do not change, but reduces the costs on the container loading and increases

the efficiency in other parts of the sawmill.

“We have reduced the amount of people and forklifts. The payoff

was maximum 6 months.”

“It was a good purchase, break-even was about 2500 containers.”

- Decreased freight costs: Increased fill rate can have direct effect in the

freight costs. Freight costs have also been reduced when the operations

have been transferred from the ports back to the sawmill.

- Better supply chain control: When handling the goods, and completing all

paperwork at the sawmill has given better control over the logistics.

“The producer can be more confident about preserving the quality

of the goods. On-site loading is always the best possibility, because

if it is loaded at the port, the producer cannot be certain about the

quality of the goods when it leaves to customers.”

61

Steel products

- Standardized cargo space: Customer has been able to switch from open-

top containers to standardized containers. Savings per container can be up

to 3000 USD.

- Worker safety: Previously, when customer used open-top containers, the

recognized risks were that when the container roof is opened, there is a

risk of falling down. Second safety perspective is that when lowering the

steel bundles inside the container, it required personnel to stay inside to

unlock the lifting equipment from the goods.

- Reduced operating costs: Operating cost savings are planned by reducing

the amount of operators involving the investment.

- Decreased freight costs: Freight costs have drastically been reduced after

the application of LoadPlate at the factory. The cost savings have been

gained from multiple points: 1) changing container type, 2) no additional

truck traffic between port and factory, and 3) no extra cost of

containerization done by subcontractors.

- Better supply chain control: With the steel manufacturer, the benefit has

been to secure the availability of the containers, by changing the container

type.

- Simple and easy to use, and maintain: In cases where LoadPlate is

positioned as key component in the supply chain, customers appreciate the

standardization of the unit from component perspective. Also the

documentation was proven to be valued, since it includes complete part

lists and maintenance instructions so that the customer is able to do the

maintenance internally.

62

6.3.3 Points-of-difference and Points-of-parity

As the container loading equipment can be thought as new invention in the

market, rarely it is seen that there is competitive situation in the buying process.

Actiw has history knowledge of several different self-made container loaders. It

has been seen that in current times makeshift solutions are getting less usual as

there are market offerings available. Most beneficial for Actiw, is to map points of

difference and points of parity against the conventional loading method. This can

advance the marketing efforts in cases when company is trying to access new

markets, and it is necessary to educate the customer in the topic. The proposed

setting between points-of-parities and points-of-difference can be seen below in

Table 10.

Table 10: Points-of-Parities and Points-of-Difference for LoadPlate

Customer

segment: Sta

ndar

dize

d ca

rgo

spac

e

Eas

y lo

ad f

orm

ing

Wor

ker

safe

ty

Incr

ease

d fi

ll r

ate

Les

s pr

oduc

t dam

ages

Incr

ease

d pr

oduc

tivi

ty

Red

uced

ope

rati

ng c

osts

Dec

reas

ed f

reig

ht c

osts

Bet

ter

supp

ly c

hain

con

trol

Sim

ple

and

easy

to u

se, a

nd

mai

ntai

n

3PL – Forest products

P P&D D D P&D P D P P P

3PL – Steel products

P D D P D D D P P D

Producer – Forest products

P D D D D D D D D P

Producer – Steel products

D D D P D D D D D D

D = Point-of-Difference P = Point-of-Parity

63

The value propositions for the forestry sector are divided partially by market

experience, and partly by the answers gained from the interviews. In comparison

to the initial steps of the value proposition process of Anderson et al. (see Figure

5), there is some partial knowledge inside the company where these are based on.

When looking from third party subcontractor perspective, Points-of-Parities can

be noted on standardized cargo spaces, easy load forming, less product damages,

increased productivity, better supply chain control, decreased freight cost, and the

simplicity to use.

The standardized cargo space does not change in lumber loading, whether the

container is stuffed with conventional methods or with specialized machinery.

The standard container which is used is 40 foot long container due the high

availability. If increased productivity is seen as containers per shift, then this can

be point-of-difference in favor of conventional method. If the product dimensions

are so, that there is large tolerance between the goods and the wall, then

conventional method is faster. But if inspecting from operational cost perspective,

then LoadPlate can be cheaper option due fewer workers are involved in the

loading. Supply chain control is not seen as important factor for the 3PL

subcontractors since the producers are handling the steps, and subcontractor only

provides the service for the containerization. Decrease in freight cost is not

important factor for subcontractors, since the producer carries the cost of the

transportation. Simplicity to use and maintain can be seen as points-of-parity,

since the equipment is not more complicated to maintain than forklifts. Easy load

forming and product damages can be seen as both, points-of-difference and

points-of-parities. Points-of-parities in a case where the products are within

standard dimensions, so that it is easy and safe to load with forklifts.

Points-of-difference in cases where the producer can fit different lengths of

packages into one container and there is less free space inside the container. Other

points-of-difference are: worker safety, increased fill rate, and reduced operating

64

costs. Worker safety improves on the notion that fewer workers are involved in

the loading operations. The same argument fits for reduced operating costs, in

addition second forklift and the driver can be removed from the loading process.

Increased fill rate can prove benefits to the subcontractor if the pricing is cubic

based, meaning that if the subcontractor can fit more products in one container, he

or she gains more profit from the same work.

For steel loading subcontractors the recognized points-of-difference are: easy load

forming, worker safety, less product damages, increased productivity, reduced

operating costs, and simplicity to use. Easy load forming and increased

productivity go together. The less time the load forming takes, the better the

productivity. Worker safety is improved when no lifting boom apparatus are

needed for loading, no personnel need to be inside the container to unhook the

lifting chains, and less people are involved in the loading. Reduction of people has

also direct cost effect on the operating costs. Typically it can be assumed, that

there are at least three workers involved in steel container loading: one operating

forklift or overhead crane, and two lashing and unlashing the steel chains or wires.

Product damages are reduced when no steel chains or wires are required for the

lifting. Points-of-Parity are standardized cargo space, increased fill rate, decreased

freight costs, and better supply chain control. Changing the container type does

not have impact for the subcontractor profitability or operations, and thus cannot

profit from the decreased freight costs. Fill rate is non-important factor for steel

loading, since the weight limits are exceeded before the volume of the container is

full. Supply chain control has same justification as with forest product

subcontractors.

For forest product producers the change in the overall supply chain can have

larger impact. The points-of-difference for producers are: easy load forming,

worker safety, increased fill rate, less product damages, increased productivity,

reduced operating costs, decreased freight costs, and better supply chain control.

Easy load forming allows flexibility for the operations, the loads can be done

before the container arrives to the sawmill for loading. This also allows freedom

65

in load planning which again goes hand in hand with increased fill rates and

decreased freight costs. Benefits in operating cost perspective and worker safety

are the same as with the subcontractors. In addition to the operating cost

proposition is the fact that the producer now does not need to pay for the

containerization service. Supply chain control can be improved as the supplier has

control over the goods over the whole process. This way producer can guarantee

the quality of the goods when it leaves from the sawmill. Points-of-parity to the

conventional working method are the standardized cargo space and easy usability.

For these the reasons are similar as in the third party subcontractor situation.

For steel producers the assumed benefits gained from points-of-difference are as

following. Changing to standard cargo space, the savings in freight costs can have

greater impact in savings, than any other factor. One container can save up to

3000USD in shipping expenses. This effects also the overall freight cost change,

because the producer does not need to pay for the container loading service. Easy

load forming can give benefits comparing to open-top container loading and

different forklift applications. Worker safety is improved in situations when

container type is changed from open-top to dry containers, as the workers do not

need to climb ladders to open and close the roof tarpaulin, and no people need to

be inside the container during the loading process. Product damages are reduced

as the products can be handled safely outside the container, without chains or steel

wires, and the loading process itself is controlled. Productivity increase can be

measured in two ways, containers loaded per shift, or less workers involved per

container. In steel loading securing of the cargo is very time consuming, which

sets restrictions in the container loading process, if the loading and securing is

done in same place. Other possibility is to remove the loaded container to securing

station, where workers fasten the cargo so that it does not move during the sea

transportation. Operation costs can be reduced by having less people in the

loading process. Supply chain is better controlled when the loading is happening

inside the own factory premises. The quality control over the goods can be

handled easier and the production equipment involved in the loading process is

specially selected for that product type. Simple and easy operations are also

66

differing factor when comparing to open-top loading. With LoadPlate several

steps of the process can be reduced, for example, opening and closing the

tarpaulin. Only recognized point of difference is the better space utilization inside

container; as mentioned earlier, as steel is heavier material than lumber, the

maximum payload is reached before the volume of the container is filled.

6.4 Verification of customer value propositions

For the verification on customer value propositions, an example case is

constructed. Though it would be seem natural to use steel producer case, as the

points-of-differences are greater than with other customer segments, an case of

lumber loading is used since the marketing focus of the company is currently for

these markets. Numbers used are rough industry averages. The instances are

compared by each value proposition separately. Only value propositions, which

are quantifiable in a simple manner, are being demonstrated.

EXAMPLE CASE – SAWMILL CONTAINERIZATION:

A sawmill which is located 250km away from the port, is considering to move the

containerization operations to the mill. The sawmill can produce 400 000m³ of

lumber and 85% is going to export in 40ft high cube containers. Typical fill rate at

the port is approximately 51m³ in one container. Container shipping cost is 1500€.

The mill is working in two shifts, but container loading in only one 10h shift.

The fill rate can have direct effect on the shipping costs. By using industry

verified numbers on the fill rate increase, we can propose to potential savings seen

on Table 11.

67

Table 11: Fill rate comparison

Current

operations

Planned

operations

Change

Annual volume

340 000m³

340 000m³

0%

Fill rate 51 m³ 51,8 m³ +1,6%

Required containers 6 666 pcs 6 563 pcs - 103 pcs

Container rent

1500 € 1500 € 0%

Total: 9 999 000€ 9 844 500€ 154 500€

Table 12: Cost of operations comparison

Current

operations

Planned

operations

Change

Containers per year 6666 pcs 6563 pcs -1,8%

Containers per day 26,5 pcs 26 pcs

Workdays per year 252 d 252 d

Hours per day 10 h 10 h

Required forklifts 2 pcs 1 pcs - 50%

Maintenance cost 3€ /h 3€ /h + 2,6€ /h - 7%

Tyres 5,2 € /h 5,2 € /h - 50%

Fuel / electricity 7€ /h 7€ /h + 1€ /h - 43%

Worker cost / a 50 000€ 50 000€

Required workers 3 1 - 66 %

Total: 226 608€ 97 376€ 129 232€

Table 12 the operational costs are compared. The numbers stated are per forklift

truck or per LoadPlate. In the comparison the scenario is so that the producer

needs to containerize same volume of products. Majority of the savings are gained

from reduced need of workforce. The typical amount of needed workers per

68

container is three, two forklift drivers and one footman. The difference in running

costs were 38% lower.

Customer complaint costs can include the price reduction of the damaged

products. Also indirect costs for handling of the complaint should be taken into

account. In the example, cost of complaint is assumed to be 1% of the value of the

goods inside container. Comparison of the situations can be seen on Table 13

below.

Table 13: Customer complaint cost comparison

Current

operations

Planned

operations

Change

Required containers 6 666 pcs 6 563 pcs -1,8%

Complaint ratio 0,5% 0,1% - 80%

Cost per complaint 2500 € 2500 €

Total: 83 325€ 16 407€ 66 918€

69

7 CONCLUSIONS

In this thesis research was done to build understanding on current customer

buying behavior and motives. The research was done by first studying the main

researches on organizational buying behavior and customer value proposition

design. After this interviews were conducted to investigate the buying motives

and buying center size and members.

The organizational buying behavior studies the variables and complicated

relationships concerned individual buying task (Sheth 1973 p.51). The

organizational buying situations can be divided into three categories; new task,

modified rebuy, and straight rebuy (Robinson, et al. 1967 p. 28). The study

focused on first two, as the unit sales of the case company are modified according

to each purchase. The newness of the problem, information needs and

consideration of alternatives always require more effort in the new task buying

situations (Robinson, et al. 1967 p.25). As the purpose of the study was to

understand the buying motives and buying center compositions of current

customers, the study failed to completely answer to the first research question:

What has been the buying decision criteria of current customer base? Reason for

this was that since the interviews were conducted in person during sales trips, the

available time and possible persons to interview were limited. This could have

been avoided by making the interviews over the phone. Since the main function of

the researcher is to do sales function in the company, knowing current customers

personally is an advantage.

Customer value propositions are reasons why customer should consider in

changing the supplier (Anderson et al. 2010). The customer value propositions

need to be verified with customers and need to have to be easy to transform into

monetary terms. Effective customer value propositions take into consideration the

own offering and also the next best alternative (Anderson et al. 2006 p.5). The

best practice in customer value propositions is to have resonating focus with the

customer business. This requires deep understanding in the customer business and

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71

by each customer. These customer case stories should include the before and after

situation of the customer and also have the scenarios presented in monetary terms.

This would help the company to understand the possible benefits what the

customer has gained and also to create more accurate ROI calculator, which is

based on actual figures, instead of theoretical ones. The investigation phase would

also need to be done in a standardized form, so the customer cases could be

comparable against each other.

As the purchasing process from the customer perspective has been more or less

straight forward and the customers need more education on the topic, it is

recommended that more effort is put understanding the customer operations after

the implementation. This information would help Actiw to create stories how the

equipment changes the operating environment, which again would help to create

realistic scenarios to potential customers. These stories should include clear

notion on the before and after situations, how the business and operations has

changed after the investment. For this, customer management program should be

implemented. This way regular infeed of information can be gathered from the

markets, but also from possible problems. Quantitative and qualitative results

should be included in the customer reference stories to demonstrate the value.

Great importance should be focused on the first year after the implementation, so

that the learning curve of the future customers can be reduced and the positive

experiences can be transferred to customers while negative experiences can be

avoided with training. By taking better care of the customers, it can improve the

satisfaction of the customers. As customers noted in the interviews, peers and

colleagues have been good and trusted information sources. By encouraging

current customers to do positive word-of-mouth, it could have great impact on the

overall sales of the LoadPlate.

The framework of Anderson et.al seen on Figure 5, should be taken into practice

and to be used alongside the marketing planning process. The customer value

propositions listed above should be tested with current customers to gain feedback

and proposed metrics to evaluate the propositions.

Figu

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72

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73

vary. The experience with similar working methods should also be investigated

with new customers, as the information requirements and such are much greater

and the related uncertainty when the customer is unexperienced with this kind of

purchases.

7.1.1 Confirmed Value Propositions

The study has gathered up the current customer value propositions and divided

them to points-of-parities and points-of-differences. These can be used as a base

for customer value management program and further development of value

marketing. To continue the sales process development, it is recommended that

company applies the customer value management process of Anderson et.al

(2007).

The interviews did succeed to confirm all of the customer value propositions of

which the company is already using. This information works as an insight for the

company, as now the propositions can be pinpointed to specific customer and

product types. By this it is possible to promote the resonating focus on the value

propositions by customer type instead of all benefits value propositions.

The value propositions are following:

- Standardized cargo space: Using standard cargo spaces can yield benefits

to the customers in several ways. Customer is not dedicated to one service

provider and thus can freely do competitive bidding on the transportation

service providers. Customer does not need to use specialized containers,

enjoying thus direct savings from transportation cost and better availability

of containers. No fixed cost has to be put into specialized containers or

trailers.

- Easy load forming: When load forming is done outside the container,

products can be placed in free order.

74

- Worker safety: No workers are needed inside container during loading,

resulting in worker safety. Also when less people are involved in the

loading process, risk is reduced.

- Increased fill rate: As container is aligned and locked with LoadPlate, it

gives greater accuracy and control in the loading. This way producer can

optimize the product dimensions so that the container fill rate is increased.

- Less product damages: Better control over the loading process is reducing

the product damages. LoadPlate also does not force the goods inside

container when comparing against normal working methods.

- Increased productivity: Productivity can be increased by reducing the

work steps in the container loading process. In most cases containers need

to be placed on the ground for loading, requiring either specialized

container trailer or container handling equipment. Other metrics to

evaluate productivity can be how many containers per shift are being

loaded, or how many workers are needed to load each container.

- Reduced operating costs: Running and lifecycle costs of LoadPlate are

rather small. Since the unit is only consuming electricity for short periods

of time, part and fuel consumption is rather minimal.

- Decreased freight costs: Switching from special containers to standard

containers can reduce the overall supply chain cost. Also increased fill rate

can drop the shipping costs.

- Better supply chain control: In cases where producer is taking charge of

the container loading process, gives better control over the goods. Each

handling can be subject to product damages. If handlings can be reduced,

product quality can improve.

-

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75

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76

existing knowledge, internal assessment needs to be done on how the loading

would be done and what modifications would the LoadPlate need to make it work.

The price level is then reviewed with the customer to ensure that it is feasible to

continue and that the sales can be possible. By selecting either key or account

plan, company assesses that is there potential for multiple units, and how

independent individual units are. This sales process follows account plan.

Geographical and environmental assessment gives understanding in country or

culture specific boundaries for trade, or legal requirements for machinery.

Environmental aspect can set limitation for the support of equipment or

availability of spare parts.

When assessing customers process, internal calculations and process assessment is

made to understand how customer works at that moment. By reflecting to existing

deliveries, and possible case descriptions, a before – after scenario can be

constructed for the customer case. If customer has already done internal

assessments on the challenges on the loading process, then these findings are

incorporated to the case. At this point an assessment is done, if the customer is

potential for sales. In this point also the competition is mapped, as it has direct

effect on the value proposition selection.

Own product is positioned according to the points-of-differences against the next

best alternative. Using the customer case and internal costs of the customer, more

accurate simulation of the possible investment is done to demonstrate the value in

monetary terms.

After the internal work is done with the LoadPlate, and company has rough

understanding on how much the solution is worth to the customer, it is agreed

together with the customer that what the requirements are for the investment. By

deepening the accuracy of the simulation, an return of investment and total cost of

ownership assessment can be done by reflecting the data from earlier deliveries to

specific customer case.

77

In impact quantification the resonating focus value propositions are presented to

the customer. These one or two propositions should work as the tip of the spear

during the quantification, but also other point-of-difference propositions should be

taken into account, as these create more accurate picture of the change.

During the negotiation the terms of transaction is being settled and agreed upon.

This should include the legal agreements, delivery, timetable and price.

After delivery, there should be situation review in 6, 12, and 24 months after the

delivery. This way the learning curve and change in customer experiences can be

followed more closely. This information can be used as information to improve

training of new and existing customers. In this point also the value calculations

should be revised to the originally made ones. This will provide accuracy to the

future calculations and also the reliability of these calculations.

7.2 Limitations to the study

The study partially failed to answer to the first research question: Buying decision

criteria of current customer base? As some of the companies selected for the

interviews have owned the equipment for a long time, organizational changes,

retirements, and passing’s due illnesses made it challenging to find customers who

were involved in the initial purchases. As the modified rebuy situations had been

more recent, buying center members were easier to find. But as the focus was to

understand the situation on the initial purchase, so that the situations would be

comparable to use with potential customers, the study failed in reaching this

objective.

Small amount of interviews per company could not give broad understanding in

the customer organizations. Also the geographical diversity in the interviews was

small, as the Nordic business cultures are alike. Since Actiw has goal to expand to

North American lumber markets, this serves the function partly. Interviews of

North American lumber companies would have increased the insight of the target

78

market.

However, this study has given a good base for Actiw to start systematically

interview and investigate the value what the customers have gained. This

information can then be used for more organized marketing, which can lead into

success in the turbulent global markets.

79

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Brown, B.P., Zablah, A.R., Bellenger, D.N. & Donthu, N. (2012). “What factors influence buying center brand sensitivity?” Industrial Marketing Management. Vol. 41. pp.508-520 Bunn, M.D. (1993). “Taxonomy of Buying Decision Approaches” Journal of Marketing Vol. 57 (January 1993). pp. 38-56 Eisenhardt, K. (1989). Building theories from case study reserach. Academy of Management Review, Vol. 14, No. 4, pp. 532-550. Eisenhardt, K., & Graebner, M. (2007). Theory building from cases: opportunities and challenges. Academy of Management Journal, Vol. 50 No. 1, pp. 25-32. Farrell, M.A. & Schroder, B. (1996) “Influence Strategies in Organizational Buying Decisions”. Industrial Marketing Management Vol. 25. Pp. 293-303 Ferguson, J.L. and Johnson, W.J. (2010). “Customer response to dissatisfaction: A synthesis of literature and conceptual framework.” Industrial Marketing Management. Vol.40. pp.118-127

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Hapag-Lloyd: Container Specification. Source: https://www.hapag-lloyd.com/downloads/press_and_media/publications/Brochure_Container_Specification_en.pdf. Accessed 21.4.2015 Jalkala, A. and Salminen, R.T. (2010). ”Practices and functions of customer reference marketing – Leveraging customer references as marketing assets.” Industrial Marketing Management. Vol. 39. pp. 975-985. Johnston, W.J. and Bonoma, T.V. (1981). “The Buying Center: Structure and Interaction Patterns.” The Journal of Marketing. Vol. 45 No. 3. pp. 143-156 Johnston, W.J. and Lewin, J.E. (1996) “Organizational Buying Behavior: Towards an Integrative Framework”. Journal of Business Research. Vol.35. pp.1-15 Katrichis, J.M. (1998) “Exploring Departmental Level Interaction Patterns in Organizational Purchasing Decisions”. Industrial Marketing Management Vol.27. pp.135-146 Moon, J. & Tikoo, S. (2002) “Buying decision approaches of organizational buyers and users”. Journal of Business Research. Vol. 55. Pp. 293-299 Robinson, P. J., Faris, C. W. and Wind, Y. (1967) Industrial Buying and Creative Marketing. (1st ed.) Boston, USA: Allyn & Bacon, Inc.

Salminen, R. & Möller, K. (2006). “Role of references in business markets – Towards a normative theory of referencing. Journal of Business-to-Business Marketing. 13(1), pp. 1-52.

SFS. (1988). SFS ISO 668, Rahtikontit, Sarja 1 – Luokitus, Mitat ja Ohjearvot. Helsinki: SFS.

SFS. (1989). SFS-ISO 1496/1, Rahtikontit, Sarja 1, Erittely ja koetus – Osa 1: yleiskäyttöön tarkoitetut yleisrahtikontit. Helsinki: SFS.

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Thompson, K., Mitchell, H. and Knox, S. (1998). “Organizational Buying Behaviour in Changing Times”. European Management Journal. Vol. 16, No.6. pp. 698-705 Tikkanen, H. & Aspara, J. (2008). Projektimarkkinointi – Projektiliiketoiminnan asiakassuhteet, verkostot ja ansainta. Helsinki:Talentum

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Töytäri, P., Alejandro, T., Parvinen, P., & Ollila, I. (2011). Bridging the theory to application gap in value-based selling. Journal of Business & Industrial Marketing , Vol. 26, No. 7, pp. 493-502. Webster, F.E. (1965) “Modeling the Industrial Buying Process”, Journal of Marketing Research. Vol. II (November 1965), pp. 370-76

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Appendix I

LoadPlate Deliveries

Customer TypeYear of Delivery

Country Goods Type

1 Fin-Terpuu Oy LoadPlate 2 001 Finland Timber 3PL2 ILP-Group Oy LoadPlate 2 001 Finland Timber 3PL3 Bergkvist-Insjön Trävaru KB LoadPlate 2 003 Sweden Timber Producer4 Karl Hedin Sågverk AB LoadPlate 2 003 Sweden Timber Producer5 Steveco Oy LoadPlate 2 004 Finland Timber 3PL6 Steveco Oy MultiLP 2 004 Finland Timber 3PL7 Vika Wood LoadPlate 2 004 Latvia Timber Producer8 Luvian Saha Oy LoadPlate 2 004 Finland Timber Producer9 Sören Thyr AB LoadPlate 2 005 Sweden Timber 3PL

10 Stuveribolaget Gävle AB LoadPlate 2 006 Sweden Timber 3PL11 Sören Thyr AB LoadPlate 2 006 Sweden Timber 3PL12 Solomenskij Lesozavod JSC LoadPlate 2 006 Russia Timber Producer13 Stora Enso Timber AG, Ybbs LoadPlate 2 007 Austria Timber Producer14 Stora Enso Timber AG, Sollenau LoadPlate 2 007 Austria Timber Producer15 Bois Du Nord LoadPlate 2 008 France Timber Warehouse16 Sören Thyr AB LoadPlate 2 008 Sweden Timber 3PL17 van Leeuwen Buizen LoadPlate 2 008 Holland Steel Warehouse18 Norrköpings Hamn och Stuveri AB LoadPlate 2 008 Sweden Timber 3PL19 Sandvik Materials Technology LoadPlate 2 008 Sweden Steel Producer20 Fredericia Shipping A/S LoadPlate 2 008 Denmark Steel 3PL21 DCT Gdansk LoadPlate 2 009 Poland General Cargo 3PL22 TM Baikal LoadPlate 2 010 Russia Timber Producer23 Kokkolan Lastaus Oy (Rauanheimo) LoadPlate 2 010 Finland Timber 3PL24 Skutskärs Hamn & Logistik AB LoadPlate 2 010 Sweden Pulp reels 3PL25 Stuveribolaget Gävle AB LoadPlate 2 011 Sweden Steel 3PL26 Hiansa Panel, S.A. LoadPlate 2 011 Spain Construction panels Producer27 DB Schenker - Romtrans LoadPlate 2 011 Romania General Cargo 3PL28 Fin-Terpuu Oy LoadPlate 2 011 Finland Timber 3PL29 Raahen Satama MultiLP 2 011 Finland Steel 3PL30 LLC Amurskaya LK LoadPlate 2 012 Russia Timber Producer31 ILP-Group Oy LoadPlate 2 013 Finland Timber 3PL32 Sören Thyr AB LoadPlate 2 013 Sweden Timber 3PL33 Carpenter Technology LoadPlate 2 013 USA Steel Producer34 Sandvik Materials Technology LoadPlate 2013 India Steel Producer35 Sandvik Materials Technology LoadPlate 2013 Czech Rep. Steel Producer36 Sandvik Materials Technology LoadPlate 2013 China Steel Producer37 Sandvik Materials Technology LoadPlate 2013 USA Steel Producer38 Heraeus Quarzglas Gmbh LoadPlate 2013 Germany General Cargo Producer39 Fin-Terpuu Oy LoadPlate 2013 Finland Timber 3PL40 Cedar d.o.o (Limit Plus) LoadPlate 2013 Croatia Timber Producer41 Ege-Profil LoadPlate 2013 Turkey Steel Producer42 Reliance industries LoadPlate 2013 Intia Petrochemical Producer43 Forestal y paperla Conception LoadPlate 2014 Chile Tissue paper Producer44 Jansens & Dieperink LoadPlate 2014 Hollanti Aluminum Silos Producer45 Pfeifer Holz LoadPlate 2014 Germany Timber Producer46 SCA Forest Products - Umeå LoadPlate 2014 Sweden Timber Producer47 SCA Forest Products - Sundsvall LoadPlate 2014 Sweden Timber Producer48 Luvian Saha Oy LoadPlate 2014 Finland Timber Producer49 Shorelink Ab LoadPlate 2014 Sweden Timber 3PL50 Eskilstuna Kommunfastinghet LoadPlate 2014 Sweden Timber 3PL51 Tilly Holz LoadPlate 2014 Austria Timber Producer52 Sören Thyr AB LoadPlate 2015 Sweden Timber 3PL53 Vänerhamn AB LoadPlate 2015 Sweden Timber 3PL54 Euroports Rauma Oy LoadPlate 2015 Finland Timber 3PL55 Perfinor LoadPlate 2015 Spain Construction panels Producer

Identify suitable customers

•Is there currentcustomers insame productgroup?

•Similarities toexistingdeliveries?

•Account or keyaccount plan?

•Geographical &Environmentalconditions

Understand customer business

•Internal costs inloading process?

•Does customerrealize challengesin loadingprocess?

•Map competition•Sales potential?

Position own offering

•Find points-of-differencecompared tocompetition /current situation

•Simulate businesscase

Set mutual targets

•Goals which needto be reached?

•ROI limit?•Timetable?•Total cost ofownership

Quantify impact

•Experiencetransfer fromearlier projects?

•Select resonatingfocus valuepropositions

•Total cost ofownership

Negotiate, offer, and deliver

•Agreement oncontract terms andprice•Check legalconditions

•Check localrequirements

Verify and document impact

•Measure changes ofimplementation at6, 12, and 24m

•Check forunforseen(mis)benefits

•Adjust valuepropositions

•Case study

Appendix 2

Go / No-Go

Go / No-Go

Go / No-Go

Go / No-Go

Go / No-Go

Go / No-Go